As we have been reporting, landlords with small holdings, typically individuals or couples, are banned by government orders from evicting tenants unable to pay rent. But in the new ABnormal, with no money coming in, they have to pay taxes, mortgages, and insurance payments.
Such landlords often are immigrants and nonwhite and have invested in a few rental units to lay an economic foundation for their future, Bloomberg noted.
Rather than see their credit rating destroyed by foreclosure, some landlords are taking equity loans on their properties or even on their own homes to cover overdue expenses.
Others are selling to private equity firms and other big property firms trolling the market for distressed properties.
One small-time landlord reported to Bloomberg that he is barraged by offers from investors that would allow him to clear a year’s worth of his unpaid fuel bills and property taxes.
He had hoped to pass the building, bought by his immigrant father, to his recently born son.
However, after tenants absconded owing him more than $140,000 in back rent, he is unable to replace his buildings’ broken boiler and will be unable to recover back rent from those disappeared tenants when government aid to tenants arrives.
Almost $47 billion in rent supports are beginning to flow from the U.S. treasury to tenants behind in their rent, with one installment allotted in December and the other in March.
That aid, which would flow through to landlords, is “moving at the speed of bureaucracy” and may come too late to save small-scale property owners from default and foreclosure, according to Bloomberg.
Although no figures have tallied the number of small landlords in jeopardy, less than a third hold mortgages from Fannie Mae, Freddie Mac, or other federally-supported loan agencies, leaving them unqualified for mortgage forbearance programs.
At the same time, cities – desperate for cash after the economic shutdown has starved them for a year – have been unwilling to forgive or forestall property tax payments.
In New York State, the federal supports will cover no more than 80 percent of back rent, utilities, and late fees owed to landlords, according to Moody’s Analytics; in Illinois, the proportion covered will be a scant 45 percent.
“The concern here, over the course of a few years, is that a growing share of mom-and-pop landlords will be forced to sell and rents will go up,” Peter Hepburn, a Rutgers University sociologist who studies housing inequality, told Bloomberg. “There’s a lot of private equity interest and a real possibility of growing consolidation.”
TRENDPOST: Once again, we note how the “Bigs” and the “essentials” keep getting bigger while the small businesses and entrepreneurs are getting squeezed out.
